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Humpage","","Economic Commentary by Owen F. Humpage analyzes how the United States could eliminate its external imbalance, focusing on private savings, private investment, and the federal plus state and local government budget deficit. It introduces a national income and product accounting framework for current-account deficits, showing the identity linking current-account balances to savings, investment, and total budget deficits. The discussion evaluates U.S. policies against these criteria, using data and tables, including national income accounts since 1980.",{"@graph":69,"@context":123},[70,84,106],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/requirements-for-eliminating-the-trade-deficit-by-owen-f-humpage/321386/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/requirements-for-eliminating-the-trade-deficit-by-owen-f-humpage/321386.png","ImageObject",300,407,{"name":92,"@type":93},"Theodora","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-22","2026-09-21",true,{"@type":102,"interactionType":103,"userInteractionCount":105},"InteractionCounter",{"@type":104},"ViewAction",12,{"@type":107,"mainEntity":108},"FAQPage",[109,115,119],{"name":110,"@type":111,"acceptedAnswer":112},"What accounting framework is used to explain a current-account deficit?","Question",{"text":113,"@type":114},"The text uses the national income and product accounts to record GNP components and rearranges them to express the current-account deficit in terms of savings, investment, and the total government budget deficit.","Answer",{"name":116,"@type":111,"acceptedAnswer":117},"What relationship links current-account balances to savings and investment?",{"text":118,"@type":114},"It states that a nation’s current-account balance equals gross private savings minus gross private investment minus the total government budget deficit.",{"name":120,"@type":111,"acceptedAnswer":121},"What policies does the United States rely on to reduce the trade imbalance?",{"text":122,"@type":114},"The document describes promoting depreciation of the dollar and encouraging Japan and Germany to stimulate their economies to increase demand for U.S. exports.","https://schema.org",{"og:url":83,"og:type":125,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":127,"canonical":83},"index,follow",{"doc_id":129,"site_id":62},321386,1790013456,{"code":4,"msg":5,"data":132},{"doc_id":129,"user_id":133,"nickname":92,"user_avatar":134,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":135,"file_id":136,"file_url":137,"file_type":138,"file_size":139,"view_count":105,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":140,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":141,"faqs":142,"seo_title":143,"seo_description":67,"update_tm":144,"read_time":145,"preview_page_count":4},687197207919,"https://ap-avatar.wpscdn.com/avatar/a000253d6f5f7c60be?x-image-process=image/resize,m_fixed,w_180,h_180&k=1779446848396160552","ECONOMICCOMMENTARY  \nIf the United States is to eliminate its ex-ternal deficit,it must satisfy certainbasic economic conditions with respectto its private savings,private invest-ment,and total government budgetdeficit.1  \nThe U.S.current-account deficitreached a record $140.6 billion in 1986and probably will not improve,on bal-ance,this year.A slight worsening earlyin 1987 could offset a modest improve-ment late in the year.Consequently,theUnited States will continue to amassexternal debts and will become one ofthe world's largest debtor countries.  \nThe intense foreign competition evi-denced by recent current-account defi-cits has slowed growth in U.S.traded-goods industries and has heightenedprotectionist sentiments to levelsunparalleled since the 1930s.Moreover,the rapid rise in U.S.internationalindebtedness challenges our ability tosustain the rate of growth in ourstandard of living that most of us havecome to expect.  \nThe United States thus far has reliedprimarily on a two-pronged approach toalleviate the trade imbalance.Untilquite recently,we have promoted adepreciation of the dollar in foreign-exchange markets,hoping to restore thecompetitiveness of U.S.goods.In addi-tion,we are encouragingJapan and Ger-many to stimulate their economies in or-der to increase demand for U.S.exports.  \nThis Economic Commentary exam-ines whether these policies meet thebasic criteria required to eliminate ourexternal imbalance.We first develop aframework to illustrate the nature ofcurrent-account deficits and to describeconditions for correcting a deficit.Next,we compare U.S.policy against thisframework.  \nOwen F.Humpage is an economic adviser at theFederal Reserve Bank of Cleveland  \nThe views stated herein are those of the authorand not necessarily those of the Federal ReserveBank of Cleveland or of the Board of Governors oftheFederal Reserve System.  \nChart 1 The Current-Account Balance in a National-  \n# Income-Account Framework\n\nThe Nature of a Current-Account Deficit  \nThe national income and productaccounts provide an accounting frame-work for recording our gross nationalproduct(GNP).The accounts showthat nominal GNP equals the realizednominal values of private consumption,plus private investment,plus govern-ment spending,plus exports,lessimports.One can adjust the accountsand rearrange them to get an expres-sion for the current-account deficit.The current account records ournation's international trade in goodsand services plus net transfers thatcarry no obligation for repayment.  \nRearranged,the accounting frame-work indicates that a nation's grossprivate savings,less its gross privateinvestment,less its total government(state,local,and federal)budget deficitequal its current-account balance(seechart 1).According to this expression,anation running a current-accountdeficit is not saving sufficiently tofinance its private investment and totalgovernment budget deficit.Similarly,anation running a current-account sur-  \n1.Most textbooks on international economicspresent this argument;it stems from S.S.Alex-ander,\"Effects of Devaluation on a Trade Bal-ance,\"International Monetary Fund Staff Papers,vol.2(April 1952),pp.263-78.See also EconomicReport of the President,U.S.Government PrintingOffice,Washington,D.C.,transmitted to theCongress January 1987,Chapter 3.  \nplus is saving more than is needed tofinance its private investment and totalgovernment deficit  \nIn 1986,for example,private savings  \nin the United States totaled $681 bil-lion;private investment equaled $686billion;and the government budgetdeficit amounted to $143 billion.Withprivate savings less than privateinvestment and the total governmentbudget deficit last year,the UnitedStates experienced a$143 billioncurrent-account deficit.2 The $5 billiondiscrepancy in the arithmetic reflectserrors and omissions in our measure-ments of international transactions,plus some other adjustments that typi-cally are small in magnitude.3  \nTable 1 presents similar data for the  \nUnited Sta","cbCairjilReDuhek","https://ap.wps.com/l/cbCairjilReDuhek","pdf",1466936,"English","# Income-Account Framework\n## The Nature of a Current-Account Deficit\n# Requirements for Eliminating the Trade Deficit","[{\"question\":\"What accounting framework is used to explain a current-account deficit?\",\"answer\":\"The text uses the national income and product accounts to record GNP components and rearranges them to express the current-account deficit in terms of savings, investment, and the total government budget deficit.\"},{\"question\":\"What relationship links current-account balances to savings and investment?\",\"answer\":\"It states that a nation’s current-account balance equals gross private savings minus gross private investment minus the total government budget deficit.\"},{\"question\":\"What policies does the United States rely on to reduce the trade imbalance?\",\"answer\":\"The document describes promoting depreciation of the dollar and encouraging Japan and Germany to stimulate their economies to increase demand for U.S. exports.\"}]","Requirements for Eliminating the Trade Deficit - by Owen F. Humpage | PDF",1789959150,13]